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-- Posted Sunday, 7 March 2004 | Digg This Article
March 5 - Gold $401 up $8.60 - Silver $6.95 up 21 cents Our energy is in proportion to the resistance it meets. We attempt nothing great but from a sense of the difficulties we have to encounter, we persevere in nothing great but from a pride in overcoming them... William Hazlitt (William Hazlitt (1778-1830) is one of the great masters of English prose style. Hazlitt turned criticism into art form. Many of his essays are like conversation poems - witty, profound and eagerly alive to the surfaces of the work of art he is appreciating. No study of the Romantic movement can be complete without a reading of his essays. For too long he has been regarded as a marginal figure, instead of being seen as the supreme genius of Romantic prose. A radical republican, like Milton, he possessed an epic imagination which he chose to embody in an eloquent stream of reviews and critical essays.)
GO GATA!!!! A horrendous US jobs report sent the dollar reeling and gold/silver soaring. March 5 (Bloomberg) -- U.S. employers added 21,000 workers in February, less than the lowest forecast amid the fastest annual economic expansion in at least two decades. The unemployment rate held at 5.6 percent and more job-seekers left the work force.
The results follow a January gain of 97,000 that was less than previously estimated, the Labor Department said in Washington, and trailed the median forecast of 130,000 in a Bloomberg News survey of economists. Factory employment fell by 3,000, the 43rd straight decline. –END- Thus, the two upcoming big events which pressured gold this past week were both non-event duds – those being a cut in European interest rates, which was to weaken the euro, and a positive US jobs report, which was supposed to show a strengthening American economy, thereby giving further support to the dollar. 0 for 2! The disappointing job news electrified the bond bulls, dollar bears and gold bulls. Bonds rose 3 points at one point, finally settling at 115 28/32, up 2 5/32. The dollar fell to 88.23, down .99, while the euro jumped 1.84 to 123.47. Gold quickly bolted $9 higher before Goldman Sachs and the gold police showed up to pound gold down, as per their usual drill. For almost the entire day the $6 rule was enforced with gold trading in a range of $6 to $7 higher. However, the buying was so large The Gold Cartel forces were taken on and gold moved up another $2 as we came into the close. While I will have a smile on my face this weekend, it must be reported how sickening this gold manipulation operation is. Anyone watching gold trade today could see it. We should have been up $16, just like we got on the downsides. But ... NO ... not allowed. Worse thing is, ONLY the GATA camp screams about this outrage. Good to see gold with a $400 handle again. If we take out, $403.50 basis the April contract, the floor thinks gold will accelerate very quickly. It ought to. The fundamentals are as good as they get. The gold open interest fell 3497 contracts yesterday to 231,680 going into the jobs report. The silver open interest also dropped to 111,226, down 2311 contracts. A number of traders feared a strong report could send the precious metals into the toilet. There were no gaps left today, leaving a good shot at some sort of breakaway gap next week. JUST IN: One of my best sources heard today from a veteran London gold dealer that he has never seen the gold market this tight in 35 years in Switzerland, England and the rest of Europe. Gold is just not available in size at these low prices. A number of coin operations are shutting down because they have no supply. The coin market is barren. He also tells me this London dealer confirms the information presented to you over the past few months about China. They are shifting a portion of their dollar reserves into the precious metals, and doing so in a manner that doesn’t ruffle the dollar, which could happen were they directly selling the dollar and buying euros for example. Gold has turned
http://futures.tradingcharts.com/chart/GD/44 Silver soared after the jobs report and, unlike gold, made a new high for the day late in the session. Technically, silver looks like a powerhouse. Regard: http://futures.tradingcharts.com/chart/SV/34 That is one spectacular chart. Silver has broken out from its recent base and trading range. The base is strong enough to support a significant move to the upside. $7.50 for openers. Once the silver genie is let out of the bottle, anything can happen. The energy behind the coming silver move is extremely POWERFUL! Don’t be surprised if we get our $1 move to the upside within weeks. Now for the silver weekly, a new high: http://futures.tradingcharts.com/chart/SV/W As a result of yesterday’s deliveries, March silver open interest fell 1310 contracts to 715. There were only 68 deliveries today, 24 stopped by Deutsche Bank again (a stopper is someone who receives the deliveries from someone else who is selling the silver). Regarding Goldman Sachs buying those 2 to 3 thousand April $7.50 silver calls yesterday. For 5 ½ years I have been ranting about their manipulating the gold market. Clearly, they are in cahoots with the US Government/Fed. The quid pro quo must be that Goldman stays all over the gold price for The Gold Cartel and, in turn, they receive information in advance regarding economic reports. You can’t tell me GS didn’t know how bad the employment report was going to be. They knew silver and gold would fly and bought all those silver calls on the cheap. The floor thought they way overpaid for them. The floor also doesn’t deal with the rigging operation facts. Speaking of the silver floor. Most of the traders are young and have never seen a silver bull market. They can’t even visualize one, which is why there is so little enthusiasm on the floor. The few old timers down there are telling them they won’t believe what the silver price can do on the upside and probably will. So much for those traders on the Comex who said silver will never stay above $6.80. There is also disquiet on the Comex about copper deliveries. There are so many people taking delivery, they can’t get the copper out of the warehouses on time. Lining up trucks to move it has become a problem. Wait until the silver starts disappearing. I would like to thank the Café sources again, who have provided us with correct and incredibly valuable gold/silver information over the past many months. Been at this commodity market drill for many years and never had anything like this happen to me before. Hail to the internet and some very nice and plugged-in Café members! The John Brimelow Report Bears bless overhead supplier Friday, March 05, 2004 India ex-duty premiums: AM $6.50, PM $5.41, with world gold at $392.50 and $393.25. Ample for legal imports. Overall sentiment in India was boosted today by the success of the largest secondary offering in the country’s history, for the Indian National Oil and Natural Gas Corporation. The Bombay Stock Exchange was up 3.8% on the week. Further weakness in the yen created some interest in gold futures on TOCOM this morning. Volume jumped 77% to the equivalent of 31,016 Comex lots, the active contract closed up 16 yen. World gold was 80c above NY at the close. However, the public seemed inclined to liquidate: open interest fell by the equivalent of 1,870 Comex contracts. As yet, the public is not convinced a prolonged, yen-gold futures-friendly slide in the yen will happen. Equally, the Chinese, as judged by the Shanghai Gold Exchange, do not expect imminent yuan revaluation: the various grades of gold traded in Shanghai have moved up to suspiciously wide premiums of over $5, which would not happen if a possible jump in the Yuan was taken seriously. (NY on Thursday traded 42,501 contracts; open interest fell 3,497 lots.) Yesterday, during which modest rally attempts by gold were uniformly blocked by selling, has of course been completely superseded by today’s action. In an eerie reprise of Friday a month ago, a disappointing US economic statistic triggered a powerful rally, so violent as to indicate that at least some of the downward pressure of late was short selling. Even more eerie is the magnitude of the selling which has promptly appeared in NY to cap the rally: 40,000 contacts estimated by 10 AM, 25,000 of that between 9AM & 10. during which gold essentially moved sideways. This is exactly what happened a month ago. Nevertheless, notwithstanding the apparent presence of a rescue team in the form of a stand by overhead seller, the Bears face some difficulty. They are trying to stop the market some $10 lower than a month ago, with the main physical buyers demonstrably active and insulated from changes in the US$ by their Central Banks. The Western spec community is only lightly involved. And if the yen weakness continues, TOCOM interest is possible. JB CARTEL CAPITULATION WATCH Oil continues to surge, closing at $37.26, up .62. The CRB rebounded to 274.57. What is gold doing at $400? It ought to be steaming towards $500. It will when the cabal begins to lose control of their scam. The yen tanked badly today, finishing the day at 112.04 and making a new low for the move. There was massive Japanese intervention to take it down. With the surge in US bonds, the Japanese central bank is making a fortune and has the money to bury its own currency to protect its export market. Rumors are beginning to circulate the Bush Administration is very upset with the Japanese, especially with the dismal jobs outlook in the US. Talk is the Fed/Bush Administration might be preparing to drive the dollar down sharply in the near future. Lordy, lordy if that happens. Gold and silver should go bananas. Of course, they both ought to be doing so anyway with all this commodity inflation. The US consumer goes more in hock, from Jesse: This report was largely ignored today because of the jobs report.
They may not have jobs, but they are sinking into debt at a record pace. US consumer credit rose sharply in January - Fed
Reuters, 03.05.04, 3:05 PM ET WASHINGTON, March 5 (Reuters) - U.S. consumers sped up their borrowing in January, according to a Federal Reserve report out on Friday, as shoppers took advantage of low interest rates on auto loans. The Fed said consumer credit outstanding rose by a larger-than-expected $14.3 billion in January to a seasonally adjusted $2.016 trillion. That was up from the revised $8.2 billion gain seen in December and above Wall Street analysts' projections for a $5.9 billion gain. January's increase was the largest since a $17.9 billion advance seen in May. -END- GATA’s Mike Bolser: Hi Bill:
The Fed took a day off today March 5th 2004 and this caused the repo pool to fall to a very low $22.28 Billion. Moreover the pool's 30-day moving average confirmed my guess yesterday that a new wrinkle has been added to the Fed's latest repo down draft.
As I mentioned, this latest turnaround in the pool's 30-day ma appears to be different, it does not show a sharp "V" pattern as it turned back up. Today's inaction by the Fed in repos causes the pool's ma to dip further down and signals that there may be even more downward pressure on the DOW next week. It is reasonable to look around for macroeconomic events that require the Fed to lower the DOW (at least temporarily). Perhaps, in the face of deteriorating fundamentals, a manufactured bond surge?
As for the DOW, its 30-day ma is almost fully rounded off in a topping pattern headed level for now at 10,600, as predicted. Do not expect the DOW to move upward in March under these repo conditions.
As the dollar took a ruler-edge drop at 8:45 AM this morning we can only wonder at the desperation of the Fed as it struggles with an unruly CRB Index, runaway commodities and a no longer credible "no inflation" mantra. Indeed, the large bulk shipping carriers are queued up for weeks waiting to load basic ore and other items on the way to China. The shipping rates are well up adding even more to inflationary expectations.
More on my new website:
http://www.pbase.com/gmbolser/interventional_analysis The posting times for the Repos chart is around noon while the posting time for the others is usually by 6-7PM as the Fed normally completes its currency exchange H10 report by 5:30PM.
As of yesterday's report, the DIVG 200-day moving average continues in an unbroken (almost linear) up slope, headed for new territory. The Fed is in retreat.
Mike LATE EDITION ADD from Mike:
Hi Bill:
I have updated my IA (Interventional Analysis) website this evening so all images are current at this hour, 5PM December 5th 2004.
Yen/dollar divergence-convergence linked to gold moves
Of some importance is the apparent link between the periods of yen/dollar divergence (in the Relative changes currency and gold inverted chart presentation where the yen falls as it gains value). This divergence occurs when the yen and dollar BOTH lose relative value and the odd presentation convention was chosen to highlight any such yen/dollar changes.
Gold is seen to move up when there has been a rapid yen/dollar divergence. Specifically, in April '03, mid July '03 and again in Sept '03. In each case the yen/dollar divergence was sharp and gold moved up.
The reverse seems also true. During periods of convergence, which is to say when the yen and dollar both gained relative value, gold moved down. Note January '03. December's sharp up move by the dollar was, according to the Fed, a weighting change and not related to nominal valuation.
The yen/dollar divergence and gold price linkage is doubtless due to associated derivatives designed to suppress gold's price. Going forward, I am encouraged by this new independent gold trend indicator and will give it thorough attention in the coming weeks.
What this means
Given last week's sharp divergence in the yen/dollar traces (yen now over 111 from 105) we can expect a further up move in gold on top of today's $10 move.
I continue to highlight the DIVG's 200-day ma as a strong indicator of a
retreat-in-progress by the gold cartel.
http://www.pbase.com/gmbolser/interventional_analysis
Mike
From The King Report: Intel has been rallying on rumor/innuendo/hope/hype that it would emit a bullish mid-Q1 update. But the environment is long on hype and short on fact, so after Thursday’s close, Intel rained on the intractabull parade. They tightened their Jan forecast of Q1 revenue from $7.9B to $8.5B down to $8B to $8.2B. Analysts expected $8.27B, so Intel sold off in after-hour trading. If more people would’ve checked DRAM prices (DRMX on Bloomberg) and noticed China’s surging semiconductor capacity (abetted by attractive government incentives) they would not have gotten so jiggy. Prices are lower on increasing Asian inventories. Furthermore, Intel and other techs have been playing the same game of issuing initially bullish forecasts with later lowered forecasts and then they beat earnings by a penny. How many times can people be manipulated before they realize the scheme? Of course if you want to be fooled, you don’t care. Call it the W.C. Fields method of investor relations ("Never give a sucker an even break"…US Trust’s Jimmy Chang after Intel’s disappointing announcement, "We’re coming down to reality." And if reality every appears en masse on Wall or Main Streets, you know the rest. Dr. Marc Faber notes, "According to the Yale School of Management's opinion poll, currently 95% of individuals and close to 92% of financial institutions believe that the US stock market will rise over the next 12 months." http://www.ameinfo.com/news/Detailed/35660.html Are you comfortable in crowds? -END- ISLANDIA, N.Y., March 5 /PRNewswire/ -- Over four out of ten Americans (42%) are making just minimum payments or no payments on their credit card balances, according to the Cambridge Consumer Credit Index. Houston's Dan Norcini: Hi Bill:
Probably a bit too late to get this update in but commitments data for gold reveals a sizeable shift in fund positioning which I believe is quite significant especially in light of today's price action. There was a swing of nearly 19,000 contracts in the net fund position from the long side to the short side in gold. Funds, as of Tuesday, had reduced down to the point where they were nearly long at a 2:1 ratio. This is simply a massive shift in fund positioning from the January peak in the gold price where funds were long by nearly a 5:1 ratio. What this tells us is that the funds had begun to not only eliminate longs but were in the process of actually building a short position since the technical indicators had all flipped negative. With this setup, gold has the potential to see a very significant amount of fund short covering especially if more resistance levels are breached to the upside and the technical indicators continue on up. Ideally, we need to see a close above horizontal resistance near $405, and then a close above the 40 day Moving Average coming in near the $407 level to push them out of the market and cement the bottom in gold and prep for the next leg up. If gold manages two consecutive closes over that 40 day Moving Average, the short funds are OUT. Their black boxes will yell at them to cover and to go long. What i think bears some emphasis is the small spec category. Hats off to our gang - they continued to add to their long positions as the market went down and the funds failed out and went short. The little guys bought the weakness while the funds sold it! How' bout that? And who says the little specs are always wrong! The way the small specs are trading this gold market, they are going to have the funds and the cartel for lunch. >From where I stand, today's jobs number is so devastating to the dollar bull's cause, that I cannot see them piping up for some time after the shock of those numbers wore off. The bond market is in effect saying "NO rate hike this year. Period! End of story."
Best,
Dan Bill,
Thought your readers might appreciate seeing these. The first is a $10,000 gold certificate from 1882. The second is a $1000 silver certificate from 1880.
Who knows? If GATA has anything to say about it, we may be using something similar in the future. (Today was a good start toward that goal!!)
Derek A query from a Cafe member: A suggestion about derivatives.
When reading the bond article, the last one in the GATA report, a thought came to mind regarding the confluences in the markets, and the strange behavior of market segments that are driving economists nuts. Have you noticed that many are having a hard time telling us what it is? We hear deflation, inflation, stagflation, and every word and explanation under the sun, including the order they are going to happen in. Why can't we see what it is?
A hypothesis if you will. The strength of derivative trading via computer models is so powerful, and there is so much profit involved here for the banks, that they will back their models with all the money they have to perhaps create the edge needed to make the computer projected model correct. In other words, derivatives are the main means for making money, and the markets are now a reflection of derivative trade rather then the free flow of buy and sell markets. This aside from the hedge funds, who appear to be in control, but perhaps they themselves are also subject to models they have created in this huge derivatives bet. As the markets become heavier and heavier with layered derivatives, we get less true economic responses to situations in the way we were used to seeing them. Could this then be the end of the markets as we really knew them just a few scant years ago?
I would love your input into this notion.
Peter Peter, I think all this market manipulation/management/smoothing will lead to financial chaos as it unravels. Look at today for example. The US jobs report was an unmitigated disaster. What does the stock market do? Nothing. The DOW closed up 8 to 10,595 and the DOG fell 7 to 2047. The PPT crowd was busy holding up the DOW, while they were doing what they could to keep gold from soaring. At some point in the future, we will have a derivatives crisis and GATA will be there to say, “We told you so!” Café member commentary of interest: Hi Bill
This afternoon, I watched a cable news program that featured the head of the transportation dept. (I think, but I may have the wrong dept) He spoke of a new bill that was being created by Pres Bush that would build new roads and repair roads and bridges throughout the US. The sum of money required was an astronomical dollar amount. (Again I'm sorry, but I don't remember the exact number.) He said that this sum of money would not affect the deficit and that the program would put Americans back to work. Sounds like the 1930's again, and if these are the types of jobs that will affect employment numbers, while all of the good jobs go overseas, what truth is left? I think we are further along the road to ruin than I henceforth believed, while most Americans still don't have a clue. Sorry to be so negative, I don't mean to be, I'm sure that programs like these are bound to wake up many more people in this great country and open their eyes to see the financial dilemma we are in. Perhaps then, we can find better solutions to the problems confronting our great country, and will bring about the many positive changes" that will save the day."
Jeff Good morning Bill: I just finished reading your MIDAS column. You are probably all over this... Earlier this year (or late last year) you mentioned that Mexico may be pressuring the U.S. to give amnesty to illegal aliens or they would squeeze the COMEX. Well, I find it interesting that March silver went to a premium over May and on the same day, there's a Drudge headline that states: "Mexico to pressure U.S. for amnesty for illegal aliens'. Just a heads up. bob Bill;
Perhaps it's too early in the morning to even think about cataclysms but if one's going to occur I'll put half my chips on PPI (they are hiding it from us for a reason) and the other half on a short squeeze/blow up of silver at COMEX. The clowns in charge know the real situation where PPI is concerned. If inflation is anywhere near what my common sense tells me it is-we're in for a substantial near term rate rise. Interest rate sensitivity is the most likely the Achilles Heel of both Freddie Mac and Fannie Mae (and J.P.Morgan's 35 trillion cyclops of a derivatives book for that matter). As an aside, I worked in the capital markets for about 15 years. Interest rate derivatives. One of my accounts was the largest in the world at the time. Got to know the rate swap traders quite well. One of them left his then employer (let's just say it was a bullion bank that specialized in derivatives) and went to work for another large bank-but to trade bonds and futures. Having diner with him one night and he tells me the swap desk at his new employer (respecting his opinion) asks him to do an analysis of their swap book. He told me he "modeled" their book to show them what would happen if an adverse interest rate movement were to occur. Understand, at this point he's talking about standard deviations and the sort. He was, shall we say, mortified. The crux of his analysis was that if short term rates rose something in the order of 350 or so basis points in short order- the bank "blew up". We drank lots of wine that night but reamained unusually sober. Food for thought.
best
Rob Hi Bill,
I happened to listen to the news yesterday on France Inter, a national radio, and I was stunned when I heard Laurent Fabius, a former socialist prime minister, Bilderberger member, one of the wealthiest men in France saying that ALL the gold of the Banque de France should be sold. He told that it should be sold gradually in order not to sink the price. He said this gold has become useless because the euro is backed now by the ECB ! The proceeds should be used to fund social housing.
He said that during an electoral meeting, so may be it's a bit of demagogy.
But I thought it could interest you.
I wish you all the best. Carry on your great job.
Gilles (of France) ECU Silver, my fourth largest holding, closed in new high ground again today at 48 cents Cdn. The latest news: ECU Silver Mining to acquire 85% interest in mill2004-03-04 17:30 ET - News Release Mr. Michel Roy reports ECU Silver Mining has signed a letter of intent to acquire an 85-per-cent interest in a mill close to its Velardena operations. The purchase will be paid as follows: $200,000 (U.S.) on signature of the final agreement planned for March 16, $160,000 (U.S.) 60 days later and $150,000 (U.S.) 120 days later. By using this mill, the company intends to double its current production, to a minimum of 200 tonnes per day, before the end of March in order to generate a significant positive cash flow. This decision came after months of metallurgical testing to define the best avenue for developing the mines in the Velardena area. It also constitutes the first phase of the development program of the company. The first five holes of the current drilling campaign have been completed with success. So far, the company has confirmed the downward extension of the veins it is currently mining to 120 metres below the area being mined on the 18th level. Also, a 45-metre slightly mineralized skarn section has been cut in hole No. 5. Although the company does not expect ore grade assays, it fits perfectly with the geological model it is trying to prove. -END- There was very little enthusiasm for the gold shares today despite the solid gains in both gold and silver. It seemed more investors were looking to get out than jump on board. They did manage to find a small bid late in the day as the HUI closed at 232.17, up 6.39 and the XAU gained 2.85 to 101.98. The HUI rounded bottom formation becomes more impressive by the day. The set up for a gold/silver price explosion is all in place. Commodity prices are on a tear. The Fed can’t raise rates. The likelihood of the dollar tanking is probable. The Iraq mess is worsening, and so on. One more time: gold/silver and the shares remain THE historic investment opportunity of a lifetime! GATA BE IN IT TO WIN IT! MIDAS
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-- Posted Sunday, 7 March 2004 | Digg This Article
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